{"id":53301,"date":"2026-05-02T01:31:19","date_gmt":"2026-05-02T01:31:19","guid":{"rendered":"https:\/\/www.europesays.com\/people\/53301\/"},"modified":"2026-05-02T01:31:19","modified_gmt":"2026-05-02T01:31:19","slug":"big-techs-700-billion-ai-splurge-is-misleading","status":"publish","type":"post","link":"https:\/\/www.europesays.com\/people\/53301\/","title":{"rendered":"Big Tech’s $700 Billion AI Splurge Is Misleading"},"content":{"rendered":"

Big Tech’s AI spending<\/a> is surging, though not necessarily because companies are building significantly more capacity.<\/p>\n

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This week, industry executives pointed to the same underlying issue: sharply rising component costs, especially for memory chips<\/a>, are inflating capital expenditures spent on data centers and other equipment.<\/p>\n

“We are increasing our infrastructure capex forecast for this year. Most of that is due to higher component costs, particularly memory pricing,” Meta CEO Mark Zuckerberg<\/a> told analysts on Wednesday.<\/p>\n

Microsoft echoed that trend<\/a>, with CFO Amy Hood<\/a> saying that roughly $25 billion of its projected $190 billion in 2026 capex is tied to higher component prices.<\/p>\n

Amazon didn’t raise its capex forecast at all this week. Even then, CEO Andy Jassy<\/a> said memory costs have “skyrocketed,” and the company is trying to keep these costs under control.<\/p>\n

Memory prices are soaring as AI demand strains supply. Research firm TrendForce expects DRAM prices to jump as much as 63% in the second quarter of 2026, while NAND flash prices could surge 75%. NAND and DRAM are different semiconductor technologies used to hold data.<\/p>\n

That’s reshaping how investors should interpret Big Tech’s spending boom. Take a theoretical example: If you buy 100 AI components for $1,000 each, that’s $100,000 in capex. If the cost of each component goes up 25%, they now cost $1,250 each. Your capex is now $125,000, even though you’re adding zero extra capacity.<\/p>\n

When stripping out this pricing impact, Big Tech companies may not have boosted their AI buildout plans much at all this week.<\/p>\n

Take a look at this table\u00a0from BNP Paribas. Microsoft’s capex plans exceeded Wall Street estimates by $32 billion. That seems big, until you consider $25 billion of that increase comes from higher prices, not a more ambitious buildout. Meta upped its capex forecast by $10 billion. Higher memory prices could account for most, or all, of that increase.<\/p>\n

RBC Capital analysts spotted this phenomenon in early February. Back then, they estimated that higher memory prices could account for about 45% of the total capex increase by top cloud providers this year.<\/p>\n

The result is a more nuanced picture of the AI arms race. While investment remains strong, the headline numbers may overstate the pace of expansion.<\/p>\n

Instead, Big Tech is increasingly paying a premium to secure scarce components, highlighting memory pricing as a key bottleneck in the industry’s next phase of growth.<\/p>\n

Sign up for BI’s Tech Memo newsletter here<\/a>. Reach out to me via email at abarr@businessinsider.com<\/a>.<\/p>\n","protected":false},"excerpt":{"rendered":"Big Tech’s AI spending is surging, though not necessarily because companies are building significantly more capacity. Loading audio…\n","protected":false},"author":2,"featured_media":53302,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[154],"tags":[817,1167,1020,32717,5707,32713,32716,32714,32712,618,32710,32711,32715,862,6029,512],"class_list":{"0":"post-53301","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-mark-zuckerberg","8":"tag-big-tech","9":"tag-capex","10":"tag-company","11":"tag-component-cost","12":"tag-datum-center","13":"tag-dram-price","14":"tag-high-component-price","15":"tag-industry-executive","16":"tag-infrastructure-capex-forecast","17":"tag-mark-zuckerberg","18":"tag-memory-cost","19":"tag-memory-price","20":"tag-memory-pricing","21":"tag-microsoft","22":"tag-week","23":"tag-year"},"share_on_mastodon":{"url":"https:\/\/pubeurope.com\/@people\/116502402303659656","error":""},"_links":{"self":[{"href":"https:\/\/www.europesays.com\/people\/wp-json\/wp\/v2\/posts\/53301","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.europesays.com\/people\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.europesays.com\/people\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/people\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/people\/wp-json\/wp\/v2\/comments?post=53301"}],"version-history":[{"count":0,"href":"https:\/\/www.europesays.com\/people\/wp-json\/wp\/v2\/posts\/53301\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/people\/wp-json\/wp\/v2\/media\/53302"}],"wp:attachment":[{"href":"https:\/\/www.europesays.com\/people\/wp-json\/wp\/v2\/media?parent=53301"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.europesays.com\/people\/wp-json\/wp\/v2\/categories?post=53301"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.europesays.com\/people\/wp-json\/wp\/v2\/tags?post=53301"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}